Delhi HC waives GST Pre-deposit on finding Assessee Entitled to Refund of ITC [Read Order]

Heal Health Connect Solutions Private Limited, the Petitioner challenged the validity of Notification no. 09/2023 – Central Tax (‘impugned notification’) dated 31st March, 2023, as also the Show Cause Notice (‘SCN’) dated 05th December, 2023 and Demand Order dated 20th February, 2024 (‘impugned order’).

The SCN has raised various issues such as (i)Reconciliation of GSTR-01 with GSTR-3B (ii) The excess input tax credit (ITC) claimed on account of nonreconciliation of information declared in GSTR-3B (iii) Excess ITC availed in GSTR-3B compared to the tax on inward supplies declared by the suppliers (iv) Invalid ITC under Sec 16(4)

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Counsel for the Petitioner informed that the ground no. (i) as raised in the SCN has been dropped in the impugned order. In so far as ground no. (iii) is concerned, it is his submission that, in view of Section 16(4) of the Central Goods and Services Tax Act of 2017 ( ‘the Act’) the said Input Tax Credit ( ‘ITC’) has been rejected i.e., for filing of the return beyond the prescribed period.

The ITC claimed is for the period February 2019 and March 2019. It is the ld. Counsel’s submission that in view of Section 16(5) of the Act, the limitation has been extended till 30th November, 2021.

Counsel for the Petitioner submitted that the Petitioner is willing to avail the appellate remedy, but the pre-deposit may be waived, as the Petitioner is entitled to substantial amount of ITC.

The Court viewed that the amendment, in Section 16(5) of the Act, is clear to the effect that for the Financial Year 2018-19, the limitation for filing returns is extended till 30th November, 2021. On the other hand, the Adjudicating Authority has proposed to impose the demand based on the following reasoning:

“Invalid ITC under Sec 16(4) Under Sec. 16(4) of the CGST & SGST Acts, 2017, a registered person shall not be entitled to take input tax credit for supply of goods or services after the due date of furnishing the return under Sec. 39 for the month of September, Apr 18-Mar 19 (FY) i.e., 20 Oct, 2019. However, it is observed that, you have availed input tax credit after this due date.”

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A bare perusal of the reasoning makes it clear that the relevant financial year in the present case is FY 2018-19 and Section 16(5) clearly extends the period for filing returns up till 30th November, 2021. The reasoning given is therefore, prima facie not sustainable However, the Court would not like to make a final order, as the entire order is an appealable order.

The division bench of Justice Prathiba M. Singh and Justice Shail Jain waived the predeposit on the view that the Petitioner is entitled to credit/refund of ITC.

Further held that the Petitioner may approach the Appellate Authority by 15th October, 2025. The Appellate Authority shall consider the matter without being affected by the observations of the Court in order. The access to the portal, if already not available, shall be made available to the Petitioner within one week to download any documents which he may require.

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